ECB’s Villeroy: Rates to stay unchanged for next few quarters
The European Central Bank Governing Council member and Bank of France President, Francois Villeroy de Galhau said on Tuesday that interest rates have reached a plateau where they will remain for the next few quarters. He dismissed discussion of a rate cut as premature.
Key quotes
“Our reliance on forward guidance was excessive, we should be more modest with future guidance.”
“We should expect more bond volatility, renewed increases would be another reason not to hike rates.”
“We have to discontinue our PEPP reinvestments in due time, and possibly earlier then the end of 2024.”
“On our inflation target, I am not fixated on 2% to the nearest decimal place.”
“The latest developments in Israel and the oil market shouldn't significantly change downward inflation trend.”
“We should and can avoid recession, a soft landing path is more likely.”
“The question to quickly shifted from "When will we stop hiking?" to "When will we start cutting?"
“See rates plateauing for at least the next several meetings and the next few quarters.”
Market reaction
The comments above have little to no impact on the Euro. The EUR/USD pair is trading higher on the day at 1.0944, as of writing.
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